Elements of compensation and benefits

The following are some of the elements of compensation and benefits:

Basic Salary

The basic pay is the basic salary withdrawn by an employee in an organization. It depends on the company’s policies and the laws of the company. It is that part of the salary that is taxed.

House Rent Allowance (HRA)

Few companies provide their employees with accommodation or home rent allowances. This is in addition to the paid salary. It is generally calculated based on the basic salary obtained by an employee.

Other Special Allowances

Other special allowances are the monetary benefit given to the employee above the basic salary to meet specific requirements. The employers offer these additional benefits for the meeting expenditures, etc.

Variable Pay

Variable pay is that portion of the salary determined based on employee performance. When an employee hits a target or does overtime, variable pay is given in incentives, bonuses, or commissions. It is given out for the additional contribution beyond an employee’s workload.